Presidential election years can be uncertain, both politically and economically. This uncertainty can lead to a slowdown in the housing market before the election if buyers and sellers take a wait-and-see approach. An election year tends to have the biggest impact on people’s psychology about the market - which may result in heightened tensions or apprehensions in the months leading up to the election - but not necessarily a measurable impact on the actual market.
Economic Growth: A strong economy is generally good for the housing market. When people are confident about the future, they are more likely to make major purchases, such as a home. Economic news has been strong since the beginning of the year. The economy grew 3.3% in Q4 of 2023, well above analysts’ expectations. At the same time, the personal consumption index, an important gauge of inflation, came in below 3%, its lowest since March 2021.
Interest Rates: Interest rates play a significant role in the housing market. Higher interest rates make it more expensive to borrow money to buy a home, which can lead to a decline in demand. While interest rates have come down to the mid-6% range from their highs near 8% last year, they’re nowhere near the record lows during the 2020 election year, so we cannot expect to see as much activity in the market as we did the previous election year.
Political Uncertainty: Uncertainty about the outcome of an election can lead to a slowdown in the housing market.
Does the Election Outcome Matter?
The outcome of the presidential election affects the housing market, but the impact is typically minimal and temporary. If the president-elect offers policies like expanding tax breaks for first-time homebuyers, the housing market could improve slightly. However, the housing market could decline if the president-elect proposes raising taxes or increasing regulations. Historically, the effect is small and short-lived. Experts' predictions for the housing market in 2024 vary, but they agree that a crash is unlikely. Some experts believe the housing market will remain strong, driven by low unemployment rates, rising wages, and a limited supply of homes. Others foresee a slight slowdown due to rising interest rates and inflation. Overall, experts are cautiously optimistic about the housing market in 2024. They expect moderate growth, but they also warn of potential risks such as rising interest rates and inflation. Buyers and sellers should be aware of these factors and make informed decisions based on their circumstances.
2024 Predictions
While the 2024 Presidential election may affect the real estate market in the months leading up to November unless housing inventory increases or rates drop significantly, we can expect more of the same this year: low inventory creating high demand and prices remaining strong and even increasing slightly.